Volkswagen's Acquisition of Skoda Auto: A Central European Success Story


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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

Case Details:

Price:
Case Code : BSTR262 For delivery in electronic format: Rs. 400;
For delivery through courier (within India): Rs. 400 + Rs. 25 for Shipping & Handling Charges

Themes

Mergers | Acquisitions | Strategic Alliances
Case Length : 24 Pages
Period : 1991-2007
Pub Date : 2007
Teaching Note : Not Available
Organization : Volkswagen, Skoda Auto
Industry : Auto and Ancillaries
Countries : Czech Republic

Abstract:

This case discusses Volkswagen's acquisition of Skoda, a Czech Republic based car manufacturer. Set up in the late 1800s, Skoda was one of the oldest car companies in the world. The company and its cars had enjoyed considerable repute in the first half of the 1900s. However, its fortunes turned after the Second World War, when it first came under Nazi control and was later nationalized by the Czechoslovakian government. By the 1980s, Skoda cars had lost track of the technological advancements in the West, and were widely derided for their poor quality and unreliability. In 1991, VW acquired a stake in Skoda. Following this, VW went about systematically transforming Skoda's image and establishing it as a reliable mass market car brand.

The steps VW took to transform Skoda are discussed in this case. The case talks about the various dimensions of the transformation, including the HR aspects, the production improvements, new products launches, and image building initiatives. It concludes with a discussion of Skoda's role and position in VW's business portfolio, and the company's future prospects.

Issues:

» To examine the transformation of a company based in a former communist country into a well established brand in Western Europe

» To understand the issues in a merger between two companies that differed considerably in their culture, production practices and approach to business

» To appreciate the importance of avoiding a win-lose approach in a merger between such companies

» To study the various issues involved in enhancing a brand's image

Contents:

  Page No.
Skoda Crosses The Half Million Milestone   1
Background - Skoda   2
Background - Volkswagen   3
Skoda under VW   4
The Transformation of Skoda   5
Integration and HR Issues   5
Production and Quality Improvement   6
New Product Development   7
Image-Building   8
Skoda in the New Millennium 10
The Road Ahead 12
Exhibits 14

Keywords:

Skoda Auto, Volkswagen AG, Audi, Czech Republic, Central and Eastern Europe, Acquisition, Tandem Management, New Product Development, Image Building, Quality Management, Octavia, Fabia, Superb, Emerging markets.

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